I'm interested in how others may value a landlease co-op such as the Excelsior. With maintenance of over $6,600 and the potential for this to increase further then there are some appropriate rationale for the price to be lower than comparable buildings. If we say that the maintainance of the unit is $2,500 more than a comparable unit in another building then I might say that this $30,000 annual... [more]
I'm interested in how others may value a landlease co-op such as the Excelsior.
With maintenance of over $6,600 and the potential for this to increase further then there are some appropriate rationale for the price to be lower than comparable buildings.
If we say that the maintainance of the unit is $2,500 more than a comparable unit in another building then I might say that this $30,000 annual incremental cost could be valued at say $600,000 or $750,000.
The fact that it's an unusual form for the cost could deter potential buyers and so that may factor in $250,000.
The price as it's listed at $1,750,000 may then equate to $2,750,000 if it wasn't a landlease. $2,750,000 for a property which looks to be 2,750 sqft (and not the 3,200 listed) seems reasonable for a property in need of updates.
What are the flaws in my thinking? How would you value this property?
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Response by lo888
about 16 years ago
Posts: 566
Member since: Jul 2008
Is the equivalent of $1,000/SF reasonable for an apartment that needs updating in a building with a history of plumbing problems?
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Response by truthskr10
about 16 years ago
Posts: 4088
Member since: Jul 2009
Your approach is the right track, though you may want to make sure the fundamentals that your emasuring on are correct first.
This apartment appears to be 54 feet at it's widest and 46 feet at it's tallest brick to brick. That comes out to 2500 sq ft.
how are you getting 30k annual = 600k price? 20X annual? just curious -
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Response by truthskr10
about 16 years ago
Posts: 4088
Member since: Jul 2009
Oh sorry, you did notice it was a smaller apt.
"which looks to be 2,750 sqft (and not the 3,200 listed)"
rentorbuy
You have to consider what that $2500 per month is worth and it is more than 250K. On a straight 5% interest only loan, you would be paying down 600K of mortgage. So yes I agree with the 600K to 750K evaluation.
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Response by truthskr10
about 16 years ago
Posts: 4088
Member since: Jul 2009
sorry edit, don't know why I wrote the 250K bit.
You have to consider what that $2500 per month is worth. On a straight 5% interest only loan, you would be paying down 600K of mortgage.
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Response by Oxymoronic
about 16 years ago
Posts: 165
Member since: Dec 2007
Thanks all. I think the comp at East 58th is very insightful. $4.35mn with $5,800 maintenance. I think this only goes to show that comparables are established at a building by building level with sometimes nonsensical outcomes. I'm not sure it convinces me of the absolute value just that E58th is woefully overpriced.
lo888 - how serious have the plumbing problems been? I've read about the leaking swimming pool.
Rent_or_buy and truthskr10 - I got to the $750k by looking at the 5% interest rate but also uplifted to take into account that the $30k per year is going to increase over time (perhpas 5% per annum) and so should be valued at more than the $600k.
Is the equivalent of $1,000/SF reasonable for an apartment that needs updating in a building with a history of plumbing problems?
Your approach is the right track, though you may want to make sure the fundamentals that your emasuring on are correct first.
This apartment appears to be 54 feet at it's widest and 46 feet at it's tallest brick to brick. That comes out to 2500 sq ft.
As a comparison, check out the same layout at http://streeteasy.com/nyc/sale/484295-coop-425-east-58th-street-sutton-place-new-york
how are you getting 30k annual = 600k price? 20X annual? just curious -
Oh sorry, you did notice it was a smaller apt.
"which looks to be 2,750 sqft (and not the 3,200 listed)"
rentorbuy
You have to consider what that $2500 per month is worth and it is more than 250K. On a straight 5% interest only loan, you would be paying down 600K of mortgage. So yes I agree with the 600K to 750K evaluation.
sorry edit, don't know why I wrote the 250K bit.
You have to consider what that $2500 per month is worth. On a straight 5% interest only loan, you would be paying down 600K of mortgage.
Thanks all. I think the comp at East 58th is very insightful. $4.35mn with $5,800 maintenance. I think this only goes to show that comparables are established at a building by building level with sometimes nonsensical outcomes. I'm not sure it convinces me of the absolute value just that E58th is woefully overpriced.
lo888 - how serious have the plumbing problems been? I've read about the leaking swimming pool.
Rent_or_buy and truthskr10 - I got to the $750k by looking at the 5% interest rate but also uplifted to take into account that the $30k per year is going to increase over time (perhpas 5% per annum) and so should be valued at more than the $600k.
Any other advice on this property?